Rains fail to wash away farmers’ worries
Available financial resources depleted after years of drought
WHILE the recent rains have promised better days for South Africa’s farmers who have been plodding a difficult path during four years of drought, their immediate prospects are dire.
In the North West, which once was the breadbasket of the country, farmers face a great many financial hurdles.
Their “financial position is under strain because of the continuing drought over a number of seasons. Both the farmers and the towns are affected as the available financial resources have been depleted,” said Theo Rabe, financial director at the Lichtenburg-based grain and food firm NWK.
“Good rains will improve the outlook, but in general it will take at least two to three aboveaverage production seasons to recover sufficiently from a financial perspective.”
The government’s lack of drought disaster support for the commercial farming sector has generally been unfortunate and a glaring omission, said John Purchase, CEO of the Agricultural Business Chamber.
“This is despite agribusiness and farmers’ unions approaching the government pro-actively with assistance schemes to mitigate against the impact of the drought on farmers,” he said.
The Department of Agriculture, Forestry and Fisheries has spent more than R400-million on drought relief.
Chris van Zyl, general manager for policy liaison at the Transvaal Agricultural Union, said most of that expenditure was aimed at emerging and small farmers.
“The government cannot walk away from agriculture unless it is willing to accept primary responsibility for increased food shortages resulting in famine.
“It is high time that the government regarded primary food production to sustain the national populace as a strategic asset and imperative, as well as an important influence in southern Africa, earning valuable foreign exchange.”
The most serious challenge facing the agricultural sector was keeping farmers on the land, Rabe said.
“Financing the clients, coming out of a four-year drought period, to plant crops for the new season was a challenge. Most farmers are experiencing a serious cashflow problem and many have depleted their collateral in order to get production loans approved,” he said.
Rabe expects food inflation to rise to about 11% by August — meat by 8%, grain products by 12%, dairy and eggs 10% and vegetables 12%.
Other sections of the country’s agribusiness sector are also exhibiting signs of growing distress.
Dave Ford, CEO of the South African Feedlot Association, said consumers had been under financial pressure for some time, which had resulted in the beef price moving laterally after the festive season was virtually a non-event.
“The major input costs are the purchase price of the calf and the feed, both of which have increased due to the effect of the persisting drought conditions.
“The recent rains in the summer rainfall regions will have a lagged effect on maize prices as they will only affect the present crop on the lands to be harvested during the second quarter. Present stocks have already either been purchased or negotiated,” Ford said. CRUCIAL: Commercial farming, which serves outlets such as the Johannesburg fresh produce market in City Deep, must be seen as a strategic asset, say agricultural bodies
Lack of drought disaster support for commercial farming has been a glaring omission